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The Pope is wrong, again: usury is not unjust

You have probably heard the expression “papal infallibility”. Roman Catholics believe, or claim to believe or are encouraged to believe, that when the Pope speaks ex cathedra (literally, “from the throne”) on matters of faith and morals, he is “preserved from the possibility of error.”

Wisely, popes don’t like to push their luck and history’s 266 popes have together issued a grand total of only seven statements ex cathedra, most recently in 1950.

Whenever he isn’t speaking ex cathedra, which is most of the time, the Pope has the same privilege of being wrong as the rest of us.

Pope Francis, however, is abusing the privilege.

I have written already about Francis’s erroneous remarks on inequality. He was wrong there, but the explanation of his wrong-ness is subtle and unobvious.

Then last week he made a comical misstep: he brought two children to the window of his apartment and in front of a cheering crowd, had them each release a white dove. Of course, the doves were instantly set upon by larger birds and nearly killed. For those who enjoy symbolism, one bird was a raven, the other a seagull.

Those two mistakes were, I think, understandable. Concern for people in the first case and optimism in the second led him to beliefs that aren’t sustained by reality. Well, holding beliefs that aren’t sustained by reality is pretty much the Pope’s job description.

Yesterday, however, the former Señor Bergoglio crossed over from forgivable error to downright foolishness, condemning what he called “usury”.

The Church’s condemnation of for-profit lending has a long and unlovely history. It was a great excuse for burning Jews and other minorities at the stake, and by the light of those pyres, business-minded religious orders like the Knights Templar offered financial services without competition.

Later, Francis’s predecessor Clement V used the same policy as pretext to disband the Knights Templar and burn them at the stake. And here you thought the SEC was tough.

But ignore the “optics” of reviving this discredited (pun intended) policy and think about why lending and the interest charges that make lending worthwhile are valuable.

A person who borrows money does so because he needs money. If he agrees to a high (“usurious”) rate of interest, it is because he needs money badly.

Even a financially desperate person is not stupid, though: he isn’t going to borrow from a lender demanding high interest if there is a cheaper one out there. If someone is paying some astronomical interest, it because no one in town will lend him money at any lower rate, typically because it looks like he might not pay it back. It is an unfortunate situation, but the Pope, like a lot of do-gooders, is responding to an unfortunate situation by trying his damnedest (ooh look, another pun) to make it worse.

Let’s say I need to borrow $1000 to buy a used car for work. I need it so badly, and I have such bad credit, I end up agreeing to borrow the money from Bob the Loanshark for a year and then pay back $2000.

I’m sure the Pope would rather I only had to pay back $1100. I would rather pay that myself, but the problem is, no one is willing to lend me money on those terms.

If the Pope manages to either to persuade Bob the Loanshark not to lend me the money, or more likely, convince other people to put Bob in jail, well, thanks a lot, Francis, now I am screwed. No loan means no car and no car means no job. You know, if I wanted to be screwed by Catholic clergy, I would have become an altar boy.

(I’m sure not even the Pope is ill-informed enough to think that he can persuade or coerce Bob into lending me the money at lower interest. Even if Bob could be moved to disregard his own financial well-being by making below-market loans, don’t forget: I am a bad credit risk. If Bob starts making low-interest, high-risk loans, he will soon find himself without any money to lend at all.)

Mr. Pope Man, you want to help people who need loans? Then you lend them money. You own a bank (the “Institute for the Works of Religion” – it may not give away a toaster with every new checking account, but it is a bank nonetheless), go ahead and make those low-interest, high-risk loans you seem to think are a gift from God.